Qantas is pulling out of New Zealand as it hands over routes to its budget subsidiary Jetstar, meaning potential job losses for current staff.
Budget airline Jetstar announced today it is to fly domestically within New Zealand and is offering special $1 airfares to celebrate the launch - but routes will be cut.
Jetstar will begin flying domestically from June 10 between Auckland, Wellington, Christchurch and Queenstown, using 177-seat Airbus A320.
The launch of the Aussie budget airline here will see the withdrawal of flights by its parent company Qantas - with a loss of jobs.
Qantas chief executive Alan Joyce said overall the change to its budget brand Jetstar means its New Zealand employment levels will rise.
However, there will be an "impact" on Qantas jobs in Christchurch and, to a lesser extent, Wellington.
"There will be some opportunities for Qantas and Jetconnect employees to take up positions with Jetstar," Joyce said.
"For those who do not, we will offer appropriate separation packages and support."
The Jetstar special $1 fare went on sale at noon today for two hours, for travel between July 22 and September 22. And there is fine print attached - you can't take any baggage.
After the end of the launch special the cheapest standard fare will be $29.
Based on posted website fares, newcomer Jetstar is more competitive by $10 on its cheap fare - but with much less choice.
Based on one-way travel Auckland to Wellington on June 10 - Jetstar's start up day - their cheapest fare is $49 with no baggage and available on only two flights. The next fare up is $59 and the top fare is $199.
Pacific Blue offers four flights on that day with their no baggage fare at $59.95 and fares with assorted conditions ranging through $64, $229 and $265.
Air New Zealand's cheapest fare on flights running through June 10 start with smart saver at $93 through $96 to $319.
Maree Pilkington, spokesperson for Flight Centre, said they were pleased with more competition.
"It means more choice for our customers," she said.
"They're competitive, but at the moment the traditional carriers have been more competitive than ever before."
"We would be curious to see if they can maintain that level of pricing," she said.
She also agreed the announced Jetstar configuration of 177 seats on an Airbus A320 meant that there would not be much leg room on such flights.
"On the traditional carriers you'll have more leg room, there will be added services so at the end of the day is your decision to fly based on price alone
Jetstar spokesman Simon Westaway said Jetstar would add 43 percent in capacity over that previously offered by Qantas.
However, Rotorua would be dropped from the network.
Jetstar already flies on the Tasman from Christchurch, and will start flying from Auckland to Sydney and the Gold Coast later next month.
The airline is spending $20 million on expansion.
The arrival of Jetstar on domestic routes brings the number of carriers to four - alongside Pacific Blue, Air New Zealand and Qantas.
In all the Aussie budget airline promises 84 weekly return services throughout the routes it will fly - however all routes are still subject to regulatory approval.
Qantas passengers booked to travel after June 9 will automatically be rebooked on Jetstar flights.
The two airline brands will code share on domestic and trans-Tasman flights to provide seamless connections
By June, Jetstar will have a fleet of six A320 based in Auckland and Christchurch.
Qantas also announced a swathe of changes to its services to and from New Zealand today.
Qantas' Alan Joyce said: "Particularly in the current environment, we need to be flexible to ensure we remain competitive. This means applying our two brand strategy and utilising the right airline, with the right cost base and product, for the right market, to offer competitive, sustainable services."
From June 10 he said Qantas would operate more than 140 trans-Tasman return services each week between Australia and Auckland, Christchurch, Wellington and Queenstown, as well as a daily B747-400 service between Auckland and Los Angeles.
Joyce said the new international schedule to and from New Zealand will include improved timing of the daily Auckland-Los Angeles service to provide a connection to Qantas' daily New York service. Melbourne to Auckland services will be increased from two to three flights per day with Sydney to Auckland services increasing from four to five flights per day.
However, weekend services between Brisbane and Wellington will end.
- with Gareth Vaughan and Michael Field, BusinessDay.co.nz